“Building wealth is a marathon, not a sprint. Discipline is the key ingredient”
Equity market returns over the last decade have been remarkable and were well above long-term averages. Since its introduction in 1927, the S&P Composite/S&P 500 have compounded between 10-11% annually. Over the last 10 years, the index has returned 17%. These outsized returns have outpaced earnings growth, pushing the forward price/earnings ratio of the S&P 500 north of 20x, a level not seen since the Dotcom boom in the early 2000s.
High valuations do not necessarily mean the market is going to crash. There are logical reasons for higher valuations, such as low interest rates, greater concentration of capital light tech businesses, no/low transaction costs and accessibility of data. That being said the margin for error has been reduced greatly. [Read more…] about Q3 2021 Investment Letter